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Dear readers,

We start this week’s update on a tragic note. We are talking about the tragic Saurya plane crash at Kathmandu’s Tribhuvan International Airport (TIA) on Wednesday that killed 18 out of 19 passengers on board.

At this time of tragedy, our thoughts are with the friends and families of the deceased. We also wish for a speedy recovery of the pilot who survived the disaster.  

Wednesday’s incident at the TIA has once again highlighted concerns over Nepal’s aviation safety. Once again questions are being raised about the oversight role of the Civil Aviation Authority of Nepal (CAAN) and the airlines. 

Recently, there has been an increase in technical errors, emergency landings, and other issues with domestic airlines, leading to a growing sense of insecurity among the public. People are now questioning the safety of both air and land travel, especially in light of recent plane crashes and major bus accidents.

These tragedies negatively impact Nepal’s international image and could further harm the tourism industry, which is just beginning to recover from the severe effects of Covid-19. The international community is closely monitoring these incidents as Nepal seeks permission from the European Commission for Nepali planes to fly over the European airspace.

This week, the monsoon continued to wreak havoc across the country, causing loss of lives and property. Already, monsoon rains have claimed over 130 lives and caused property damage worth billions.

Now onto politics. This week, Prime Minister KP Sharma Oli secured a two-third majority in a crucial floor test at the House of Representatives. However, it remains to be seen if he can maintain this support for long. After becoming prime minister, Oli faced tough questions from lawmakers, which we covered in detail. He also made public a much-anticipated seven-point agreement reached with Nepali Congress (NC) President Sher Bahadur Deuba, which has not yet been released.

Within the NC, Oli’s primary coalition partner, internal dissatisfaction is growing over the selection of ministerial candidates for provincial and federal positions. Senior leaders Shekhar Koirala and Gagan Thapa have accused Deuba of favoring his close associates. While this discontent may not escalate significantly, the NC leadership should address these concerns to prevent potential spillover effects on the coalition government. Deuba, who has total control over party structures, should be more accommodating and provide space for marginalized groups. The same goes for Prime Minister Oli; he should address intra-party concerns rather than suppressing dissenting voices.

Outside Kathmandu, following the formation of the NC-UML coalition at the center, new chief ministers are being appointed in the provinces. Provincial governments are becoming unstable due to a frequent change of guard at the Center, but our political parties seem least bothered about it.

Meanwhile, former prime minister and CPN (Maoist Center) Chairman Pushpa Kamal Dahal, who was ousted from power, is busy with internal party meetings, emphasizing the positive aspects of his government's tenure. He claims he was ousted after corruption scandals were uncovered and has urged party members to focus on rebuilding the party's organizational base. Since losing power, Dahal has not spoken in the Parliament.

In another story this week, a cross-party committee formed to address war-era human rights issues has made some progress, but it is unclear what top politicians think about the TRC Bill pending in Parliament. With the Maoists out of power, significant progress on the TRC seems unlikely.

On the economic front, with the new government in place, attention is on Finance Minister Bishnu Prasad Poudel to revive the country's economy. Prime Minister Oli has appointed former Finance Minister and Governor Yubaraj Khatiwada as his economic advisor, delaying the unveiling of the much-awaited monetary policy. Concerns remain about whether Poudel and Khatiwada will coordinate effectively on economic issues. The public expects good coordination between the Ministry of Finance, the Prime Minister’s Office, and Nepal Rastra Bank.

Also this week, Minister for Foreign Affairs Arzu Rana Deuba outlined the government’s foreign policy priorities. It is unclear if she is consulting with the prime minister on these matters, but she has discussed China’s Belt and Road Initiative (BRI), stating it cannot proceed without wider government and public discussions. The BRI has been under discussion since Nepal signed the framework agreement in 2017, with the debate polarized between pro-BRI and anti-BRI forces in Kathmandu. China and Western countries are investing in narratives for and against the BRI, respectively, dividing politicians.

Another notable story this week concerned Deputy Speaker of the House of Representatives Indira Rana Magar. Magar faced public scrutiny after a letter surfaced in which she had written to the US Embassy in Kathmandu to facilitate the visa process for people with no official connection to her.

Some parliamentarians have accused Magar of misusing her position and trying to “traffick” people into the US, and have called for her resignation to facilitate the investigation. Magar’s party, Rastriya Swatantra Party (RSP), has defended her, stating that the letter was written last year to request the US embassy to schedule an early date for visa interviews, and that there was no ill-intention.

RSP has also claimed that their detractors are using the old letter to smear Magar and the party. However, the moral question remains, as Magar did use her official letterhead of the Deputy Speaker for her correspondence with the US embassy.

That’s all for this week. Have a great weekend!

After receiving briefings from intra-party departments, newly elected Minister for Foreign Affairs, Arzu Rana Deuba, has begun her work. Her immediate task upon taking office was to facilitate the return of Nepali students from Bangladesh, where violence erupted following nationwide protests by students demanding the abolition of the quota system in government jobs.

On Wednesday, Minister Deuba appeared before the parliamentary committee on International Relations and Tourism, where she faced a broad range of questions on foreign policy, including China’s Belt and Road Initiative (BRI). The BRI, China’s flagship program unveiled by Xi Jinping in 2018, has once again become a focal point in both domestic and foreign policy with the formation of the new government under Prime Minister KP Sharma Oli.

Minister Deuba informed the parliamentary committee that although the broad agreement on the BRI was signed in 2017, discussions on its implementation plan have only just begun. She said key details such as the project modality, loans, and specific projects are still to be finalized. She emphasized that any agreement must undergo broader discussion before signing, citing the extensive debate on the US’s Millennium Challenge Corporation (MCC) in Parliament as a precedent.

Minister Deuba further stated that the debate should not be confined to a few ministries but should include input from a wider section of stakeholders. The first phase will involve discussions within the government, with the Parliamentary committee being informed subsequently. She reassured that the broad agreement poses no threat, as it is an overarching document, and emphasized the need for collective input on how to proceed with the BRI.

This is Minister Deuba’s first statement on the BRI. China has long pressed for the signing of the BRI implementation plan. The previous government, led by CPN (Maoist Center), was prepared to sign the document, but it was canceled at the last minute by then-Prime Minister Pushpa Kamal Dahal. Although the Ministry of Foreign Affairs had sought permission to sign the document, Dahal did not grant consent.

It was widely reported that the document was not signed due to disagreements over loan terms. However, former Foreign Minister Narayan Kaji Shrestha later clarified that the implementation plan does not mention the investment modality. He added that the issues of investment would be addressed in a separate project implementation plan to be signed after the implementation plan.

Political parties are divided over China’s BRI. The CPN-UML and other communist parties advocate for progress on the BRI and are open to taking soft loans if necessary. The Nepali Congress, a key coalition partner, has officially decided to accept only grants, not loans, under the BRI. However, the BRI’s investment modality involves joint investments in specific projects, with China potentially providing some concessions.

Chinese Premier Li Qiang, in his congratulatory message to Prime Minister Oli, expressed his desire to implement the understandings reached between top leaders of the two countries and to promote collaboration under the China-Nepal Belt and Road Cooperation, as well as in other areas. While major parties have similar positions on the BRI, some adopt a softer stance for public posturing. 

In Nepal, the BRI is often perceived as a loan to finance development infrastructure. Recently, China has advised Nepali politicians to select smaller projects under this initiative instead of large, financially viable ones.

A day after winning the vote of confidence, Prime Minister KP Sharma Oli on Monday engaged in a questions-and-answer session with lawmakers from various political parties. The session covered a broad range of topics, reflecting diverse concerns and interests of the representatives. The members of parliament sought clarity on several key issues, such as infrastructure development, economic growth, good governance, corruption investigations, and ongoing national projects. Here’s the edited version of the Q&A session. 

When will the government start and complete the work of upgrading the Butwal-Pokhara (Siddhartha Highway) road section within the Gandaki Triangle to a dedicated two-lane? Also, what is the current status of the Aandhikhola High Dam Hydropower Project? Additionally, what preparations has the government made to end illegal transactions to improve the country’s economic situation? - Dhanraj Gurung, NC

The Gandaki Economic Triangle project, aimed at developing the Bharatpur-Butwal-Pokhara (Muglin) area in collaboration with the private sector, includes infrastructure, industrial growth, energy, agriculture, tourism and employment creation. The current fiscal year’s budget allocates funds for upgrading the Butwal-Pokhara (Siddhartha Highway) road section to a two-lane road, and the Siddhababa Tunnel work is nearly complete. The project is set to start in the first quarter of the fiscal year, with authorities instructed to begin work in Shrawan. 

The Aandhikhola High Dam Hydropower Project in Syangja district aims to generate 180 MW of electricity. Preliminary feasibility and environmental studies have been completed. But there is the main challenge of relocating 712 households. The government is committed to advancing this project by finalizing its modality and securing investment.

For economic governance, the government is adopting a risk-based assessment system for financial crimes. High-risk areas such as casinos, precious metals, cooperatives, real estate, remittances and banking will be closely monitored. A zero-tolerance policy against corruption will be implemented, with integrated promotion, preventive and corrective measures. Revenue leakage and illegal economic transactions will be controlled through coordinated efforts with related agencies. 

Systems like central invoice monitoring, ASYCUDA (automated system for customs data), VCIS (videojet visual code inspection system) and integrated taxpayer information systems will be developed to ensure effective revenue mobilization and economic governance.

During your previous tenure as prime minister, you issued a new map of Nepal including Kalapani, Lipulekh and Limpiyadhura. However, these areas remain only on the map. What is your policy, plan and strategy to bring these areas under Nepal’s control? - Deepak Bahadur Singh, RPP

Regarding Nepal’s international borders, the Federal Parliament, the Government of Nepal, and all Nepalis are firm on the new map of Nepal. The government is committed to resolving these issues through diplomatic negotiations with India, based on historical facts and evidence.

What initiatives will you take to investigate corruption scandals and examine the wealth amassed by politicians since 2046 BS? And will you move forward with constitutional amendments? - Dhawal Shamsher Rana, RPP

To improve public trust in governance, the government is committed to impartial and independent investigations into corruption allegations and unexplained wealth accumulation. Measures are being taken to address issues in the cooperative sector, including establishing cooperative loan recovery tribunals, credit information centers, and cooperative savings and loan protection funds. Concerning the amendments to the constitution, the process will be pursued through national consensus to address current issues and promote stability and prosperity.

When will the 828 MW Uttar Ganga Storage Hydroelectric Project in Dhorpatan municipality, Baglung, start power generation? When will the uranium extraction process in Lomantang begin? Additionally, when will the bill to operate Nepali cargo ships on international sea routes, which has remained in the Parliament for four years, be passed? - Devi Prakash Bhattachan, UML 

The Uttar Ganga Storage Hydroelectric Project, initially under the Nepal Electricity Authority, is now being developed by Uttar Ganga Power Company Limited. The feasibility study and environmental impact assessment are complete, and land acquisition is underway. The goal is to complete it within four years.

For the Lomantang uranium deposit, detailed exploration and industrial utilization modalities need development before extraction can begin. 

The bill to operate Nepali cargo ships is in the process of being presented in the Parliament after the cabinet’s approval on 11 July 2024.

During the tenure of the then NCP-led government, a decision was made in 2077 (four years ago) to hand over the construction of the remaining 79 kilometers of the 134-kilometer Darchula-Tinker Road to the Nepali Army. However, the construction of the road section has been hindered after it was merged into the “Mahakali Corridor Project.” Should the remaining 79 kilometers of the Darchula-Tinker Road be established as a separate project? Additionally, the cabinet decision on 3 May 2023 to remove the Mahakali river control office from Darchula has disrupted the flood control and maintenance works. I request the Prime Minister to instruct the concerned ministry to restore this office. - Dilendra Prasad Badu, NC

The Tusharpani-Kotedhar-Tinker section under the Mahakali Corridor Project is being constructed by the Nepali Army due to the presence of 80 percent hard rock, which facilitates the management of explosives and speeds up construction. No separate budget sub-head is maintained for roads constructed by the army, except for the Tarai-Madhes Fast Track. However, adequate budget allocation has been managed in the past and will continue to be ensured for construction progress.

For Mahakali river control, the office was relocated from Darchula to Patan in Baitadi to perform irrigation and river control works more effectively. A contact office and some technical staff are maintained in Darchula for embankment construction and monitoring. The office in Baitadi will continue these efforts.

Is there anything in the seven-point agreement that the general public would revolt against if they knew? Also, when will the bill forwarded to the Law and Human Rights Committee be finalized? - Durga Rai, Maoist Center

I have already informed this assembly about the seven-point agreement between the Nepali Congress and the CPN-UML in the context of gaining the vote of confidence yesterday. As for the bills stuck in parliamentary committees, I am hopeful that the committee members will actively and collaboratively work to finalize those bills. The government will fully support this process.

What is the government’s policy to ensure public transportation and road safety, given the tragic bus accident on July 12 in Trishuli? What is the status of the road standards and the mechanical condition of vehicles in Nepal? It’s been almost a year since the implementation of the Millennium Challenge Corporation (MCC) agreement began. How is the progress? Can we complete the project within the stipulated five years? - Deepak Giri, NC

Regarding the Trishuli bus accident, the bodies of 25 out of 62 missing passengers have been found so far, with 18 identified. Search efforts are ongoing with security personnel, and Indian divers have been involved since July 20. The bodies have been found in various locations, including Indian territories, and the search continues despite challenging conditions. The government is preparing a Road Safety Bill and has submitted a National Transport Policy to the cabinet for approval. The Road Safety Council will be established to systematically implement various road safety measures.

The MCC agreement implementation is progressing as planned. Substation construction contracts have been signed, and one section of the transmission line contract is in the final stages. The aim is to utilize the $500m grant within the agreement period. The project will significantly contribute to the development of Nepal’s energy sector and introduce new technologies for road upgrades.

The Koshi Western Canal constructed by the Indian government extends from the Koshi Barrage in Saptari district to India’s Laukahi, covering 32 kilometers in Nepal. India has built a paved road on its side, but the road on the Nepali side remains unpaved. Will the government initiate talks with India to pave the road? The road from Gaighat in Udayapur to the Indian border in Saptari district, which falls under the national pride project, has not been constructed either. Will it be built this fiscal year? Also, the Sunkoshi-Kamala Diversion project could provide irrigation services in Saptari. Will this project be constructed? - Dinesh Kumar Yadav, NC

The Koshi Western Canal’s road in Nepal is being paved gradually. The Nepal-India bilateral mechanism will be requested to remove encroachments and complete the paving. Preparatory works for the road from Gaighat to the Indian border were completed in the last fiscal. Due to financial constraints, it was not initiated, but it will be prioritized this fiscal year. The Sunkoshi-Kamala Diversion project, along with the Koshi High Dam, is under joint study by Nepal and India. Implementation of these projects will follow once the study is completed.

The government you led in 2018 initiated several national pride projects, constituency-focused strategic plans, and municipal-focused plans. Many of these projects remain incomplete or stalled. How do you plan to advance these projects? - Deepa Sharma, UML

To fulfill the dream of a prosperous Nepal and happy Nepali, my government, formed in 2018, initiated numerous national pride projects, constituency-focused strategic plans, and municipality-focused plans. This government prioritizes prompt completion of the initiated but incomplete and abandoned projects by ensuring the proper management of resources. By making the best use of limited resources, arrangements will be made to ensure that there is no shortage of budget for national pride projects, transformational projects, priority projects and other projects of national significance. Necessary budgets will be arranged for the completion of contracts under the ongoing projects.

Ahead of seeking a vote of confidence, Prime Minister KP Sharma Oli addressed Parliament on Sunday, highlighting the government’s key domestic and foreign policy priorities. Breaking from his usual lengthy speeches, Oli focused on the pressing issues facing the nation and called for cooperation among all political parties to overcome the country’s challenges.

Prime Minister Oli began his address by paying respects to the martyrs who sacrificed their lives for the country and expressing high regard for senior leaders like Pushpalal, BP Koirala, Ganeshman Singh, and Madan Bhandari. He extended condolences to the families affected by recent natural disasters, such as floods and landslides, and assured that the government is prioritizing rescue, treatment, and relief operations.

Oli highlighted five key domestic priorities and briefly touched on foreign policy, urging cooperation among all political parties to overcome the country's challenges.

The government’s first priority is to expedite long-delayed development projects. He cited a 123-kilometer road construction project in Kalikot district, which began 16 years ago and has only seen 15 percent progress, as an example of the country’s sluggish development. Noting that national pride projects have also seen minimal progress, advancing just one percent annually, Oli emphasized the need for institutional development, improved evaluation mechanisms, policy reforms, and timely disbursement of funds to contractors to ensure the completion of ongoing projects.

The second priority of the new government, according to Prime Minister Oli, is tackling the growing trade imbalance caused by declining exports. He pledged to develop a comprehensive policy within the next three months to boost exports and manage imports. 

The government’s third priority is to create a favorable investment climate and resolve issues in the agriculture sector. He emphasized the importance of the private sector as a growth engine and outlined plans to generate jobs. Oli said the government will focus on increasing production, industry, and services through extensive investment, regulating cooperatives, and prioritizing state investment in health, education, security, social protection, and large infrastructure projects.

The fourth priority is to ensure balanced and nutritious food for all citizens. Oli announced plans to develop a comprehensive strategy to improve food habits and address poverty. The prime minister promised to set specific targets to enhance nutrition, education, health, and overall well-being, particularly for children.

Tackling corruption is the fifth priority of the new government. To achieve this, Prime Minister Oli emphasized the need for a proper intention rather than a “political stunt” to maintain good governance, stating that the government would initiate investigations into corruption and abuse of power. He highlighted the importance of distinguishing between performing and non-performing employees and holding those accountable who fail to complete their work on time and within budget.

Prime Minister Oli painted a bleak picture of the current state of the economy, noting declines in both imports and exports, reduced revenue collection, low-interest rates, increasing defaulters, stalled development projects, and six million people living below the poverty line.  

Probably for the first time since 1990, the entire country has plunged into pessimism, Oli told Parliament, calling for the need to instill hope among the people by encouraging rapid economic development. To do so, he said the government will focus on sectors such as information technology, tourism, energy, agriculture, forestry, industry, and physical infrastructure as main drivers of economic growth. He added Policies and regulations will be formulated to promote economic growth through these sectors, with support from fiscal and monetary policies.

On foreign policy, Prime Minister Oli emphasized independence, dignity, and development needs. He said that his government believes in a good neighborly relationship and shall act accordingly, while expecting the same from close neighbors. He also pledged to address the genuine concerns of neighboring nations.

Oli also justified the alliance between the two largest parties, citing historical instances of collaboration, such as ending the Rana regime in 1950, overthrowing the Panchayat era in 1990, ending violence in 2006, and promulgating the new constitution in 2014.

Amid concerns over the constitution promulgation, Prime Minister Oli assured that the constitution drafting process would be forward-looking and not undermine previous achievements. He stated that the constitution is a means to development, not an end, and any points hindering development would be amended. He called for national consensus and unity to address political instability, the main obstacle to development.

Dear readers,

This week, KP Sharma Oli, chairperson of CPN-UML, was sworn in as prime minister for the fourth time in his decades-long political career. He first became prime minister in 2015 during India’s economic blockade, led a communist government in 2018 with support from more than two-thirds of the parliament, and briefly served again in 2021.

Oli had not expected to return to power so soon. If the alliance between CPN (Maoist Center) and UML had continued, Pushpa Kamal Dahal might have handed power to Oli after two years. However, by allying with the largest party in the Parliament, the Nepali Congress, Oli returned to power this week. According to their agreement, he will hand over power to NC President Sher Bahadur Deuba after two years. Initially, the NC and UML had mooted a national unity government with the Maoist Center. The plan was to let Dahal lead for an additional year, then hand over to Oli, who would eventually pass the leadership back to Deuba. This proposal fell through as the NC and UML doubted Dahal. Including all major parties in a national unity government would have been ideal. 

Soon after his appointment Prime Minister Oli formed a 22-member cabinet without the delays seen in the past, which is a positive start. But the cabinet has faced scrutiny for its poor representation of women, Dalits and other marginalized communities. The new government's main priorities are stability, economic recovery and constitutional amendments. However, the agreement between the NC and UML has not been publicized, and the coalition has yet to present its Common Minimum Program (CMP). Oli is expected to outline the government’s policies and priorities during his address to the parliament on July 21, while seeking a vote of confidence. 

Major powers, including India, the US and China, have congratulated Oli on his appointment. Foreign ambassadors in Kathmandu are also visiting Singhadurbar to congratulate the new ministers. These powers are keenly awaiting the NC-UML coalition’s foreign policy blueprint. Observers are interested in how the two parties, with differing views on some issues, align their positions to present a unified message on bilateral and global matters. In the past, the UML has criticized the NC for failing to balance relations between India and China. 

Now, with the two parties working together, close coordination among the top leadership is essential to avoid contradictory messages. The newly-appointed Minister for Foreign Affairs, Arzu Rana Deuba, has pledged to maintain balanced and cordial relations with major powers. Incidentally, Nepal established formal diplomatic relations with the Republic of Kiribati this week. Nepal now has formal diplomatic ties with 183 countries, which is a good thing. We hope Nepal’s diplomacy will further expand and prosper under Deuba’s tenure.

On the economic front, Nepal Stock Exchange (Nepse) index hit a 26-month high and breached the psychological 2,300-point mark this week. The stock market rally coincided with UML Vice-chairperson Bishnu Prasad Poudel’s return to the finance ministry. While this stock market bump bodes well for Paudel, he still has a challenge of addressing some crucial issues, such as increasing capital expenditure, stimulating loan demand, boosting private confidence, and making the market dynamic.

How will the latest coalition government under Prime Minister Oli fare? It is too early to tell but Prime Minister Oli’s one-week in office leaves a lot to be desired. The prime minister has spent his first week attending public functions, rather than channelizing his time and energies on prime ministerial duties, especially at a time when the country is facing several challenges. As the leader of the country, Oli should inspire optimism among the people, restore faith in the government. 

In the coming weeks, people will closely watch the new government’s activities and performance. There is high hope that the government will take initiatives to improve the economy, create jobs, and inspire confidence in the populace about their future.

Meanwhile, out of power, CPN (Maoist Center) leader Dahal has started forming a strong opposition by bringing together fringe communist parties. This week, he organized a meeting with parties including CPN (Unified Socialist) led by Madhav Kumar Nepal. With the NC and UML forming a coalition, the opposition parties are in a weaker position in the parliament. Dahal aims to unite Maoist splinter groups to bolster his influence. When in power, Dahal often disregards these smaller parties, but out of power, he aligns with their agendas. 

In another story this week, a landslide swept away two buses and plunged them into a flood-swollen Trishuli River at Simaltal in Bharatpur Metropolitan City-29, Chitwan district. Of the 65 passengers, three survived, while 62 others were swept away. As of Thursday, authorities have managed to recover 18 bodies. The government has formed a committee to investigate and sought assistance from India, Bangladesh and other countries for rescue operations. 

Our thoughts and prayers go out to the families of the deceased and those still missing in the tragic accident. Let’s hope the search operation is successful, and that the new government comes up with a solution to make our highways safer for travel, particularly during the monsoon season.      

That’s all for this week. 

On March 4, Pushpa Kamal Dahal of CPN (Maoist Center) broke alliance with the Nepali Congress (NC) to form a new governing coalition with the CPN-UML. At the time, many political analysts saw this as a significant step towards left unity and eventual unification of communist parties. While UML Chairperson KP Sharma Oli was not particularly enthusiastic, senior leaders from his party the Maoist Center were optimistic about the unification.

It was assumed that both Oli and Dahal had recognized that the split of the erstwhile Nepal Communist Party (NCP) was a mistake, and that the two parties—UML and Maoist Center—should unite again. However, a lack of trust between Oli and Dahal led to the breakup in their alliance this week. The partnership between the two communist parties lasted just four months. This distrust between Oli and Dahal dates back to 2021 when the then NCP dissolved, resulting in the revival of the Maoist party and a split in the UML, with Madhav Kumar Nepal forming a separate party, CPN (Unified Socialist), which continues to collaborate with Dahal. 

On Sunday, with support from the NC, UML leader Oli became the prime minister. This development has significantly reduced, if not entirely closed, the prospects of left unity in the near future. The NC and UML justify their alliance by citing the need to ensure political stability and address the country’s economic issues. This rationale mirrors the left unity in 2018, which had promised political stability and economic development, resonating well with the people and securing nearly two-thirds of the votes for the left parties. The new coalition faces numerous challenges. Firstly, it must maintain internal cohesion to effectively address the country's current problems. Secondly, it needs to revitalize the economy. Additionally, it must tackle issues of good governance and corruption. The coalition has also pledged to amend the constitution but has not provided details on how this complex task will be achieved.

A major challenge for the coalition will come from within their respective parties. Historically, a lack of communication and coordination between the government and the parties has led to government collapses. Therefore, the leadership of both NC and UML must not overlook party dynamics if they wish to maintain the coalition. Oli and Deuba must be particularly careful in managing internal government differences. There have been many past instances of disagreements between the prime minister and ministers from the coalition parties in the past. Policy and appointment disagreements have also strained relations between coalition partners. The new coalition will face similar challenges, and the key question is how Oli and Deuba will manage these differences.

Another challenge arises from internal party dissatisfaction. Leaders like Shekhar Koirala and Gagan Kumar Thapa within the NC are unhappy with the selection of ministers, a common issue since the 1950s. Oli and Deuba must address these internal concerns seriously, as suppressing dissatisfaction will hinder government effectiveness.  The coalition must also address the country’s economic issues. Immediate measures are needed to coordinate efforts between the Ministry of Finance and Nepal Rastra Bank. International financial institutions like the IMF and World Bank are willing to assist, and the government should seize this opportunity.

To prevent the youth exodus abroad, the government must create job opportunities. On the international front, there are challenges in creating a favorable environment for Nepal’s economic development. The recent Investment Summit showed international interest in investing in Nepal, and the new government should build on this momentum. This involves winning the trust of key development partners, including India, China, and the US. However, even before Oli's oath ceremony, some Indian media portrayed him as a 'pro-Chinese' leader, highlighting the complexities in foreign policy among coalition partners.

While there are no fundamental differences between the NC and UML in dealing with major powers, there are visible differences in their priorities and approaches. For example, the NC is hesitant about moving forward with China’s BRI, while UML leaders advocate progress. Although Dahal, Oli, and Deuba all oppose high-interest loans from China, UML leaders have criticized the lack of progress. Similar differences exist in dealing with other countries like the US, the UK, and development partners such as Korea and Australia. Effective foreign policy will require coalition partners to consult with each other.

Frequent changes in the coalition have led to public skepticism about the government’s stability. The coalition must convey a message of stability; otherwise, it will be ineffective. Investors are wary due to frequent coalition changes over the past year and a half. If the UML-NC coalition fails to deliver, there will be no remaining alternatives, as all government formation options have already been tried.

Oli: A sharp-witted and shrewd politician 

KP Sharma Oli, elected as Nepal’s prime minister for the third time, was born on 23 Feb 1952, in Terhathum district of eastern Nepal, as the eldest son of Mohan Prasad and Madhumaya Oli. In 1963, his family moved to Jhapa district, where Oli began his political career. He became a full-time political activist and joined the Communist Party of Nepal (CPN) in 1970. That same year, he was arrested under the Public Offense Act for his involvement in the cause of democracy and the establishment of a republican state.

On 22 May 1970, Oli went into hiding to lead the movement as a full-time leader. In 1972, he was nominated as the chief of the Jhapa Movement Organizing Committee. In 1973, he was arrested on various false charges, including subversive acts, and was imprisoned for 14 years, including four years of solitary confinement. During his imprisonment, the Communist Party of Nepal (Marxist-Leninist) or CPN (ML) was formed on 26 Dec 1976, and Oli was regarded as a founding leader.

Released from jail in 1987, Oli was assigned responsibilities as a Central Committee member of the CPN (ML) and served as the in-charge of the Lumbini Zone until 1990. In 1990, he became the founding chair of the Democratic National Youth Federation, Nepal (DNYF), a youth wing of the party. The Communist Party of Nepal (Unified Marxist-Leninist) or CPN (UML) was founded on 6 Jan 1991, by merging two large communist groups, with Oli as a founding central leader.

In 1991, Oli was elected as a member of the House of Representatives from Jhapa-6 and was re-elected from Jhapa-2 in 1994. He served as the Minister for Home Affairs from 1994 to 1995 in the first popularly elected communist government under Prime Minister Man Mohan Adhikari. He held various party positions, including chief of the Central Department of International Affairs and chief of the Central Department of Publicity. From 1999 to 2002, he was the deputy leader of the main opposition party in Parliament.

Oli was appointed Deputy Prime Minister and Minister for Foreign Affairs in the interim government led by Nepali Congress’s Prime Minister Girija Prasad Koirala from April 2006 to March 2007. Although he lost the election for the Constituent Assembly in 2008, he continued to hold key party positions, including chief of the Central Department of Party School and chief of the Central Department of International Affairs.

In Nov 2013, Oli was elected as a member of the Constituent Assembly from Jhapa-7 and was elected leader of the parliamentary party in 2014. He became the chairman of the UML in July 2014. Oli first served as prime minister from 11 Oct 2015, to 24 July 2016, and again from 15 Feb 2018 to 13 July  2021.

Oli is known for his sharp wits and being a shrewd politician who is never the one to shy away from controversy. He is fond of reading the works of philosophy, political economy, literature, arts and culture. He has also been active in social works and loves to play various sports including table-tennis. 

Dear readers,

Nepal’s coalition politics continued to dominate the headlines this week. With the secret agreement between KP Sharma Oli of CPN-UML and Sher Bahadur Deuba of Nepali Congress pushing the Pushpa Kamal Dahal-led government into minority, Dahal is set to face a trust vote in Parliament today. Despite being likely to lose his seat, Dahal has been working hard to put up a fight, engaging fringe parties to secure their votes.

The Rastriya Swatantra Party (RSP) has pledged its support to Dahal, keeping its ministers in place to bolster his plan to face Parliament. The CPN (Unified Socialist) has also decided to support Dahal, who is working to revive the ‘socialist forum’, a network of communist parties opposing big parties like NC and UML. But, the Rastriya Prajatantra Party has decided not to vote for PM Dahal. 

Despite Dahal’s efforts, he is expected to lose the vote of confidence, bringing the focus to the new government formation process. The NC and UML have decided that the President should initiate this process according to Article 76(2) of the Constitution, which involves forming a coalition government of two or more political parties.

If President Ram Chandra Paudel calls for this, Oli could become prime minister by Monday. However, the Maoists and fringe parties argue that if the current government fails to secure a vote of confidence, Article 76 (3) should apply. This article states that the President shall appoint the parliamentary leader of the party with the highest number of lawmakers, meaning Deuba could be appointed prime minister instead of Oli. How Oli and Deuba navigate this issue remains to be seen. If the President adopts 76(3) to form a new government, he is likely to be dragged into the controversy so he is likely to take a few days to consult with legal experts. 

Political parties and legal experts are divided on the government formation process. The President may consult legal experts and is likely to call on parties to form a government based on Article 76 (2), as there are precedents. However, any decision by the President is likely to be challenged in the Supreme Court, making the coming week crucial.

As the NC and UML prepare to form a new government, there is speculation about potential ministerial appointments. Within the NC, rumors suggest that Deuba’s wife, Arzu Rana Deuba, might become the foreign minister, and Ramesh Lekhak might become the home minister. Formal discussions to select ministers are likely to be limited, with Deuba making final decisions in consultation with senior leaders Shekhar Koirala, Gagan Thapa and Krishna Prasad Sitaula.

On the UML front, although there are standards for selecting ministers, past records show these are rarely implemented. Ultimately, Oli, who maintains strong control over the party, will finalize the list of ministers. The number of fringe parties joining the NC-UML government remains uncertain, but their support might be crucial for constitutional amendments.

The issue of constitutional amendments has stirred political circles. Oli has clarified that while there is a tentative agreement on amendments, no specifics or agreements on forming a commission for this purpose have been reached. NC General Secretary has stated that amending the Constitution requires a broad consensus from all political parties.

Next week will be hectic for politicians as they work to form the government and select ministers. NC and UML leaders have already started informal preparations for the new government’s policies and priorities. Both parties face the challenge of quickly forming the cabinet to avoid public pessimism. Deuba and Oli need to work diligently to maintain party unity, as dissatisfaction with ministerial appointments could lead to government collapse. A democratic and consultative approach is essential for managing internal party differences and ensuring the government’s longevity. Coordination between the government and party is key, and Oli and Dahal must make their collaborative efforts more effective. Although the agreement between NC and UML is promising, the lack of internal consultations and discussions may hinder its success.

Another notable story this week was the expulsion of Mukul Dhakal as the RSP general secretary for alleged disciplinary violations, though he remains an ordinary member. Dhakal responded to the party’s decision by holding a press conference where he accused party chair, Rabi Lamichhane, of passport fraud and misappropriation of cooperative funds. Opinions on Dhakal’s expulsion are divided, with some viewing it as growing  political intolerance within the RSP and others seeing Dhakal’s behavior as anarchic. Dhakal’s expulsion and his allegations come as a huge blow to the emerging party that enjoys considerable public support.

In provincial politics, all provincial governments except Koshi and Madhes are set to undergo another shakeup following the NC-UML alliance. The UML has already withdrawn its support for the provincial governments in Lumbini and Bagmati provinces. Forming new provincial governments may take time as the NC and UML focus on the federal government.

Meanwhile, the monsoon season has brought heavy rains, causing floods and landslides that have blocked highways and disrupted transportation, leading to a spike in vegetable prices in Kathmandu. Kanchanpur experienced severe flooding on July 8, recording the heaviest rainfall in 78 years. A government representative has been sent to investigate the situation, highlighting the impact of climate change on rainfall patterns.

Also this week, a parliamentary committee traveled to Pokhara to investigate alleged corruption in the construction of Pokhara International Airport. The Commission for the Investigation of Abuse of Authority is already conducting its own investigation. It’s crucial that this issue is handled impartially to avoid politicization. The newly constructed airport in Bhaktapur’s Nalinchowk also drew attention this week, as pilots refused to fly there due to security concerns, indicating haphazard infrastructure development without proper study.

That’s all for this week. I’ll be back with more updates next week. 

Have a great weekend!

Embattled Prime Minister Pushpa Kamal Dahal is more than certain to lose the confidence vote on July 12. However, as he is determined not to step down easily, one thing is clear: There won’t be a smooth, amicable transition of power.

From the parliament’s lectern, Dahal is expected to criticize CPN-UML Chairperson KP Sharma Oli and Nepali Congress President Sher Bahadur Deuba for their surprise alliance, which reduced his government to a minority. The Maoist prime minister may accuse them of political backstabbing, question their political morality, and warn against their plan to amend the constitution. Yet, does Dahal have the moral high ground to criticize NC and UML?

Indeed, it would have been better if NC and UML had made the secret agreement's text public, but they did not. But a careful review of Dahal’s 10-year journey since the 2015 constitution shows he has no grounds to complain about betrayal by NC and UML.

Let’s revisit some instances where Dahal used NC and UML after one another to his advantage. After the promulgation of the constitution in 2015, Oli became the new prime minister with support from Dahal, whose party was in third place. But by July 2016, Dahal withdrew support from Oli and aligned with the NC to form a new government and become prime minister for the second time. Despite being in coalition with NC, Dahal later secretly signed a deal with UML for an electoral alliance, betraying NC.

In 2018, Dahal merged his party with CPN-UML to form the Nepal Communist Party, aiming to lead the powerful communist party. When Oli denied him the full-fledged party presidency, Dahal campaigned to remove Oli from power. This intra-party feud led to the dissolution of Parliament, for which all senior NCP leaders share responsibility. An agreement between Deuba and Dahal to lead the government in rotation resulted in more power struggles. 

After the 2022 national elections, where the Maoists secured only 32 of 275 seats, it was natural for NC to claim government leadership as the largest party. But Dahal, after tough bargaining, aligned with UML to become prime minister, only to betray UML in the presidential elections by supporting NC candidate Ram Chandra Paudel.

There may have been hidden factors forcing Dahal to support Paudel, but it was still a betrayal to UML. In March of this year, Dahal again ditched NC without warning and allied with UML. Just a few weeks ago, Dahal publicly suggested the government could last the full five-year tenure if they navigated between the first and second largest parties. His penchant for switching sides to suit his convenience is not hidden, as he has often demonstrated over the years. Several of Dahal’s former Maoist comrades, including former prime minister Baburam Bhattarai, have accused him of being a power-hungry individual with little to no regard for party ideology.      

Certainly there is no shortage of moral decay and corruption within NC and UML, but should anyone point the finger at or cry foul over their alliance, Dahal should be the last person. 

Dahal simply lacks the moral ground to accuse NC and UML of political immorality. Instead, he should be grateful for their support, which allowed him to lead the government despite waning support for the Maoists. In a coalition, even a small party can lead, but based on the people's mandate, the Maoists should have been in opposition, rebuilding their position. Doors may not be completely closed for him; he could become prime minister again if a rift emerges between NC and UML.

The best option for Dahal would have been to resign once UML withdrew its support. It is perceived that he is trying to influence President Paudel to initiate the government formation process through Article 76(3) of the constitution, making Deuba the prime minister. However, it is unlikely as the process should start from the initial articles of the constitution. Dahal has not publicly stated this, but his close associates suggest the President should appoint a new prime minister per Article 76(3). President Paudel has indicated to Oli and Deuba that he would begin the process from Article 76(2).

While an NC-UML government may not ensure stability, Dahal should wait. After a long gap, the first and second largest parties have pledged to provide political stability and address economic woes. The Maoists now have the chance to play the opposition role, and Dahal should seize this opportunity to rebuild his party. There is no reason for Dahal to be shocked by the NC-UML agreement.